A confidentiality agreement is a pledge by a person not to disseminate confidential information on another person or entity, but to use such information for nothing other than to do a particular service. Examples of confidential agreements are those between lawyers and their clients and doctors and their patients—though it’s not necessary for lawyers or doctors to put such agreements in writing as the law itself forbids it.
Employees, officers, and directors owe their companies confidentiality, but a written agreement provides a more secure and often broader protection. As a result, businessmen are better off executing confidentiality agreements with employees as part of their employment contracts to protect their trade secrets.
A confidentiality agreement should state what are considered confidential information and the usual exceptions: information in the public domain, information the employee had acquired before taking the job, or information he had obtained legitimately from a third party and under no obligation of confidentiality.
The agreement should also state the limited instances when such confidential information may be disclosed and to whom (usually any judicial, administrative, legislative, regulatory or self-regulatory authority, body or committee having jurisdiction over the confidential information). It must oblige the employee to return all confidential information supplied such as analyses, compilations, studies, translations or other documents.
Finally, it’s best that the employer have new employees sign a confidentiality agreement when they start work, and to make the agreement part of their work contracts.